Going beyond transforming finance
It’s clear that the expansion of digital currencies has disrupted the way that businesses think about money. However, cryptocurrencies haven’t just transformed finance. They have restored trust in trade, improved data storage solutions, revolutionised contracts and helped to reimagine energy exchange. Despite this, digital currencies have experienced a lot of teething problems that must be fixed before they can reach their full potential. But what are the main challenges to the growth of cryptocurrencies, how can they be addressed, and how will wider adoption disrupt payments?
The challenges to crypto
There are various barriers to the wider adoption of cryptocurrencies. For starters, digital currencies are often marketed as a cheaper alternative to fiat currencies – but this simply isn’t the case today. Bitcoin ATMs, for example, can charge up to 15 per cent to convert bitcoins into fiat currency. On top of this, cryptocurrencies are susceptible to price volatility. This makes them inherently unpredictable, which is a sure way of discouraging adoption. Combine these setbacks, and it’s easy to see why everyday consumers find it difficult to take cryptocurrencies seriously. There’s also the issue that no government has recognised any cryptocurrency – not even Bitcoin – as a preferred mode of currency. The likelihood of this happening any time soon is slim, especially as blockchain technologies have created concern over illegal trading. However, there are companies working to find solutions. Blockstream, for example, plans to enable global access to the Bitcoin network by the end of the year via Blockstream Satellite. The service uses satellites in space to broadcast real time Bitcoin transactions and blocks to anywhere in the world for no cost. Another organisation working towards this aim is Bitquence, by providing a mobile wallet that can hold different cryptocurrencies in single ‘baskets’. This is all about promoting digital currencies whilst making them simpler for the user. A further way to lower speculation and make crypto more familiar could be to set up physical, local exchanges instead of highly fluctuating online exchanges. One of the major issues with cryptocurrency adoption is hype. By finding ways to lessen hype (such as holding back on advertising) digital currencies may improve their chances of success.
After adoption. . .
Blockstream Satellite and Bitquence both share the same goal – to make cryptocurrencies widely available to people across the world. If these companies are successful in building a stable foundation for digital currencies, consumers and companies will be far more inclined to invest. With adequate support, cryptocurrencies could continue to have a positive impact on the industries they have already disrupted, as well as expand their portfolios. Possible applications stretch from simple purchases to online gaming. Walmart, eBay and Apple are just a handful of the influential retailers that now accept payments through Bitcoin, and there are rumours that the ultimate retail giant Amazon is planning to do the same. Cryptocurrencies could become a preferable method for making big, online purchases, ensuring protection as well as transparency. In the world of online gaming and eSports, private and secure payment methods are vital. Blockchain only casinos are already becoming popular. Eventually, all high stakes online gaming sites could convert to crypto. By 2020, eSports revenues alone are expected to reach $1.5 billion. In other words, it’s a serious market for digital currency use. However, even with the mass use of digital payment platforms like PayPal, it will be difficult for everyday consumers to take cryptocurrencies seriously after centuries of using physical coinage. Until the average person has a reason to use cryptocurrencies (for storing and recycling clean energy, for instance) then scepticism will continue. Nevertheless, once developers can get official bodies and powerful VC firms on board, then they’ll really be on the money.
Accelerating the adoption of digital currencies is as much about convincing consumers to take them seriously as fixing logistical issues. This will only be possible once cryptocurrencies are widely accessible and familiar. A stable currency needs a stable foundation, which will require time and investment. Arguably it’s the currencies that set themselves up to play the long game that have the best chance of making an impact. . . And we’ve already seen how easy it is to crash and burn.
Can cryptocurrencies become reliable enough for mass mainstream use? Will projects like Blockstream Satellite help to accelerate adoption? Which other major obstacles stand in the way, and how might they be addressed? Comment below with your thoughts.